Without a doubt, India is an emerging start-up nation. In recent years, many newly founded companies have become unicorns, competing neck and neck with some established big names. The start-up craze has compelled many 9-to-5 employees to resign from their desk jobs and embark on an entrepreneurial journey. Given this budding culture of start-ups and entrepreneurship, the government stepped up and launched the Start-up India Scheme on January 16, 2016, to assist aspiring business leaders.
What is the Start-up India Scheme?
The Start-up India Scheme was launched to promote the start-up ecosystem, encouraging entrepreneurship in both metro and small cities, and creating job opportunities across sectors. Since the inception of this scheme, the government has launched several programs that have aided aspiring businesses in a variety of ways. The scheme's program was managed by the Department for Promotion of Industry and Internal Trade (DPIIT).
What are the eligibility requirements for Start-up registration?
Any company can apply for start-up registration if it meets the following criteria.
- You must incorporate your company as a private limited or limited liability partnership.
- Your company must be less than five years old and have a turnover of less than Rs 25 crores.
- Your business must be approved by DIPP. And for that, it must be funded by angel investors, private equity, or incubators.
- Your company must have received a patron guarantee from the trademark office and an Indian patent.
- Your business must have a recommendation letter from incubation.
- Your start-up must offer an innovative product or scheme.
What are the eligibility requirements for the Start-up India Scheme?
According to the Start-up India Scheme, a start-up company must meet the following criteria to receive the benefits of the scheme.
Age
The company's age from its incorporation date must not be more than ten years.
Company type
The newly formed company must be registered as a limited liability partnership (LLP), a private limited company, or a partnership firm.
Turnover
The annual turnover of the company for any financial year must be below Rs 100 crore.
Original entity
The newly formed company must not be the result of the reconstruction or split up of an existing entity.
Innovative and scalable
The start-up company must be involved in product or service improvement or development. They must have a sustainable business model with the potential to generate jobs.
What are the benefits of a Start-up India Scheme?
This scheme provides a host of benefits to entrepreneurs. These include–
Relaxed norms
In an effort to make it easier for companies recognised by DPIIT to conduct business, the government has relaxed multiple regulations. Start-ups can now easily register as sellers on the Government e-Marketplace, which simplifies procurement. The government has also directed all public sector units, ministries, and departments to make procurement as simple as possible.
Furthermore, new entrepreneurs can submit applications for government tenders without any previous work experience or proof of a minimum annual turnover.
Easy access to funds
Start-up India Scheme provides funding assistance in two different ways.
First, the company can seek funding from the FFS (Fund of Fund for Start-ups), which has a corpus of Rs 10,000 crores. The FFS is managed by SIDBI, and the corpus is the result of SEBI-registered VC firms putting their money in to invest in promising start-ups.
Another option is SISFS (Start-up India Seed Fund Scheme). SISFS provides financial assistance to entrepreneurs during the early stages of their business, such as ideation, product trials, and commercialisation.
Easy exit
It is difficult to succeed as a start-up founder. A single wrong step or poor budget management can lead to a company's demise. Unfortunately, in India, even if a company has failed to perform and wishes to cease operations, the business closure process is lengthy.
However, if the company is DPIIT-recognised, the exit process becomes much easier. An entrepreneur can easily close his or her business within 90 days of submitting the application.
Also Read: Top Government Business Loan Schemes in India
Lower patent costs
The cost of filing for a trademark or patent is high, and the time required to obtain certification is also lengthy. However, if the company is DPIIT approved, an 80% rebate is available under the Start-up India Scheme to file a patent. In the case of trademarks, the rebate is 50%, reducing the cost to Rs 5,000 from Rs 10,000.
Moreover, due to the rapid processing time, your intellectual property application will be processed within 72 hours.
Self-certification benefit
Under this scheme, start-ups can self-certify on three environmental laws and six employment laws. The self-certification benefit is available for up to five years.
Tax benefits
Under Start-up India Scheme, companies can get tax exemption for any three consecutive financial years within ten years from their date of incorporation. This benefit is available under Section 80IAC of the Income Tax Act. Apart from that, start-ups can also get angel tax exemption under Section 56.
What documents are needed for the Start-up India Scheme?
Some key documents mandatory for this scheme are as follows:
- Business PAN card
- Certificate of incorporation
- Registration details of GST/MSME/Trademark (if available)
- Details of the board of directors
- Information on the company's revenue
- Website of the company
What are the steps involved in registering for the Start-up India Scheme?
As a start-up, you can register for the Start-up India Scheme by following the six steps outlined below.
- Go to the Start-up India official website.
- Set up your account and then log in to it.
- Share the information of your company, like registration details, name, address, etc.
- Share the details of directors, accredited representatives, or partners.
- Submit the soft copy of the required documents and undertake self-certification.
- DPIIT will conduct a verification process after the completion of the above steps. And if everything checks out, you will receive approval.
Also Read: Understanding everything about Stand Up India Scheme in 5 mins
To conclude
The Start-up India Scheme is critical to the growth of India's start-up ecosystem. Young entrepreneurs benefit greatly from the relaxed norms, easy access to funds, self-certification options, and reduced patent costs. Not only is this scheme available, but financial institutions are also offering low-interest business loans to start-ups that are at least five years old. Lenders evaluate business financials, debt coverage ratio, and other critical aspects to decide business loan interest rates.
